Britain's mobile revolution threatens end of big bank supremacy

Mobile transactions due to double by end of decade as use of cash declines

The rise of digital banking will be cemented within the next half-decade as mobile transactions double, making it easier for upstart banks to challenge the established order.

According to research seen by The Telegraph, two-thirds of the UK will be banking via the internet in five years’ time, compared with just over half today. Meanwhile, cash will account for less than half of all purchases for the first time this year.

The research from the Centre for Economics and Business Research (CEBR) claims the value of mobile transactions will double in the coming years, from £1.7bn a week last year to £3.4bn in 2020. The sum of all internet banking transactions will total £9.4bn a week, up from £5.8bn in 2013.

The figures underscore how consumers are increasingly using digital channels when shopping or sending money. While the shift gives banks an opportunity to close branches and call centres, allowing them to cut costs, it will also make it easier for digital-only challengers to make inroads on the bigger incumbents.

“The technological developments allowing for the recent surge in mobile and online banking gives significant advantages to potential new entrants to the banking market,” said the CEBR, which carried out the research on behalf of Fiserv, a financial technology company.

“This acts to reduce barriers to entry for new challenger banks, as an extensive branch network is no longer as important to customers. The increasing number of people using internet and mobile banking means that it’s cheaper than ever to reach new customers around the country.”